Russia is in default on its foreign currency debt. It is the first time this has happened since 1918, that is, since Lenin led the country. The Russian default is caused by harsh Western sanctions that have limited Moscow’s ability to pay creditors mainly because Russia was cut off from international payment systems.
THE RUSSIAN REPLICA – The allegations about the default of the Russian Federation are unfounded, the payment in foreign currency was made in May “claims, however, according to the Russian news agency, is the Kremlin spokesman, Dmitry Peskov. The payment concerns 100 million. dollars of interest on two bonds, which were initially set to expire on May 27. “These default allegations in this case are absolutely unfoundedbecause in May the necessary payment was made in foreign currency, and the fact that Euroclear withheld this money, did not bring it to the recipient, this is no longer our problem “, Peskov emphasizes. For the Kremlin spokesperson then , reports the ‘Tass’, there is no reason to define the current situation as a default.
“Gold from Russia will be sold to countries where it is required and where there are more legitimate economic regimes,” Peskov said on the possible ban by the G7 countries on imports of Russian gold. “The precious metals market is global, it is quite large, voluminous and very diverse,” explains the Kremlin spokesman. “As with other goods, of course, if a market loses its attractiveness due to illegitimate decisions, then there is a reorientation, where these goods are more in demand and where there are more comfortable and more legitimate economic regimes,” Peskov adds.
Russian finance minister Anton Siluanov called this a ‘farce’ and shouldn’t have an impact in the short term. Despite its default, Russia has a lot of financial resources. The country, recalls the ‘Washington Post’, “earned about 100 billion dollars from fuel exports alone in the first 100 days of the war. But the sanctions imposed by the United States and other Western countries prevented it from being able to access its foreign exchange reserves “. The Russian central bank had over $ 640 billion in foreign exchange reserves, the US newspaper said.
THE COMMENT OF THE USA – The fact that Russia was forced to default on foreign debt for the first time since the October Revolution, together with the decline in GDP which this year should be “double-digit” and inflation that exceeds the “20%” demonstrates the impact that sanctions adopted by Western countries are having “over time” on Moscow’s ability to wage war in Ukraine. This was underlined by a senior US official.
THE ANALYSIS – Russia, comments Gabriel Debach, market analyst at eToro, “actually enters Default, after the non-payment within the grace period (expired Sunday) on two Eurobond coupons relating to approximately 100 million dollars of interest. foreign debt on the Russian side that had not occurred since 1918, or when the Bolsheviks led by Lenin repudiated the tsarist debts “.
Meanwhile, Debach continues, “if the uncertainty with which Russian creditors are grappling, in a financial war they are not part of, in the G7 were not enough, the United States, United Kingdom, Japan and Canada are planning to announce of a ban on imports of Russian gold. An event defined at most symbolic with the flows already limited by sanctions. The price of gold meanwhile registers upward pressures, even if more limited than those observed on other raw materials, despite the Russia produces about 10% of the global supply and represents the second largest producer, immediately after China “.
From a technical point of view, gold, notes the analyst, “after the decline in April, has been trading between $ 1800- $ 1880 in a congestion area since May, in a complete absence of trend. L The event could therefore represent a catalyst, in which the investor should remain focused waiting for operational signals, especially on any support and resistance breaks that could be more exploited if accompanied by increases in the strength of the trend “.
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